Parsons said North Texas’ strong job growth and increasing population are fueling demand for rental housing.

And home purchases are being held down by a tight inventory of housing and tough mortgage lending standards.

During the last year, net apartment leasing in D-FW totaled almost 600 units in the first quarter. That was less than in first quarter 2013, but those numbers tend to be volatile.

“We had such an unusually strong demand number in the fourth quarter that it isn’t surprising to see the first quarter come in lower than last year” for net leasing, Parsons said. “Combine that with an abnormally low vacancy level in existing product, and the laws of supply and demand limit absorption potential.”

Only about 6 percent of D-FW apartments are vacant.

More on the way

Parsons said it’s too early to say how all the new apartment projects in the pipeline in North Texas will do.

“Much of the pent-up demand for new apartments has now been burned off, and with so much more supply on the way, we expect to see moderately slower lease-ups going forward,” he said.

“That likely means lesser rent growth in the hot-development areas, but as long as the economy continues to produce jobs, we should continue to see fairly strong rent growth in D-FW’s more established neighborhoods.”

No slowdown

Builders say there’s no sign of a slowdown in either construction or tenant demand.

“Given the tailwinds, it is hard to argue that we are overbuilding right now,” said Steve Bancroft of Trammell Crow Residenital. “From a leasing perspective, we have not seen a slowdown in the first quarter.”

Bancroft said that in hot local markets it’s more difficult to acquire apartment development sites.

“It does not feel like the construction pace is accelerating to me,” he said. “I would tell you the deals are harder to find given the rise in land costs, despite higher rents in the market.”

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